With the growth of computing systems and various interfacing advancements, one area having not achieved significant development is online banking. In particular, private lending and old credit scoring techniques continue to inhibit the liquidity of capital available to individuals. These techniques fail to support the individual, in part because of the literal translation from the brick and mortar lending institutions to the online world.
Prior techniques for credit scoring or assessing credit worthiness generally require some sort of credit history. With a short or no credit history, an individual is generally not able to procure financing. In addition, individuals having less than extensive credit history only qualify for financing with high interest rates, hidden fees, limited lines of credit, short terms and prepayment penalties. In addition, assessing risk for individuals or loans or loan portfolios using only traditional credit history risk assessment limits the accuracy and scope of assessment of potential risk, discouraging financial transactions which might otherwise be beneficial for parties involved. There is thus a substantial need for alternative techniques for assessments of credit worthiness.
One set of individuals particularly apt to this analysis is students. Currently, the terms for private loans available to students are not nearly as favorable when compared to their federal counterparts. Private student loans typically include large origination fees, variable interest rates tied to the highest prime rate and stiff penalties for missed payments. Using the old credit scoring techniques, private lenders are unable to adequately assess the risk for each particular student. Since private lenders base their analysis largely on the credit score of the applicant and because many applicants have a short credit history, if at all, the risk assessment with the applicant is inherently flawed.
Accordingly, there is a need in the market for an online financial marketplace to properly and accurately assess the credit worthiness of individuals with little or no credit history. In that respect, there is also a need in the market for a financial scoring system that accurately predicts an income path and associated risks thereof for an individual with little or no credit history.